MM Baumann Company: Buyer's Rep - How does a buyer's agent get compensated?

If the property is listed with an Agent, the Buyer's Agent is normally able to negotiate a division of the commission the Seller has committed to pay to the Listing Agent. This commission division would be comparable to the arrangement a Listing Agent would have with an Agent who was a sub-agent. The Buyer's Agent is receiving a part of the fee the Seller is paying to the Listing Agent. Since the Buyer's Agent does not represent the Seller's interest, this fee division should be disclosed to all parties.

In cases where the Buyer's Agent locates a property suitable to the Buyer that is not listed with an Agent, the Buyer's Agent will attempt to negotiate a fee arrangement with the Seller for providing a Buyer. The Seller would normally be responsible for paying this fee to an Agent who he might list the property with. The Buyer's Agent would disclose to the Seller that he does not represent the Seller in this matter, but represents the Buyer.

In some cases, the Buyer's Agent is not able to negotiate an acceptable commission division with a Listing Broker or with the Seller. In these situations, the Buyer decides what value the property is worth to him and submits the offer with the stipulation that the Buyer's Agent fee will be paid out of the purchase price at closing to the Buyer's Agent.